Markets continued Friday’s downward trajectory Monday on fears of an interest rate hike on Wednesday and slowing growth in the overall economy. The Empire State Manufacturing Survey, projected to come in at 21, already down 2.3 points from November’s level, was a much worse 10.9 when it was released Monday Morning. The number had not been this low since mid-2017. The Housing Market Index, which had been expected to rise to 61 from November’s 60, also missed badly coming in at 56. It was amid this backdrop of softening numbers, both in the U.S. and globally, that money managers and market veterans began calling more loudly for a halt to the Fed’s interest rate increase policy. Chairman Powell has been backed into something of a corner after all but pre-announcing the December rate increase in the Fed’s policy statement. Fearing the Chairman has no choice but to implement the rate increase, markets fell across the board. The DJIA was down over 500 points once again, closing off 2.11%. The S&P broke through support levels around 2,600, hitting new lows for 2018, and finishing down 2.08% for the day. And, the Nasdaq, which was above 8,000 in September, closed at 6,753, off 2.27%.   

Fedex (FDX) and Micron Technology (MU) will headline earnings Tuesday. Fedex raised a red flag for analysts a few weeks ago when it decided to replace David Cunningham, a 36 year veteran of the company and head of the Fedex Express business, right before the holiday rush. With approximately 60% of the company’s revenue coming from the Express business, analysts are wary that the unit may be in trouble given the removal of its leader with no explanation given. With earnings falling, investors are looking for some insight into the current tech cycle when Micron reports on Tuesday. The stock traded up to $64 earlier in the year before falling back to earth and its current $33 level. Analysts are expecting 18% year-over-year growth and EPS of $2.94.

Housing starts and Redbook retail numbers will be released Tuesday morning. November housing starts are expected to fall to 1.221 million from 1.228 million in October. Given the miss on homebuilder sentiment, it would not be surprising if the expected housing starts number misses estimates as well. Retail sales numbers are projected to rise 6.6% year-over-year. Tuesday also marks the beginning of the Federal Open Market Committee meeting. While mortgage application and existing home sales numbers are slated for release Wednesday, the day’s economic data will be overshadowed by the release of the Fed’s decision on interest rates at 2pm. While there is a rising chorus railing against the December rate rise, it is still expected that the Fed will increase interest rates by .25% when it announces its decision Wednesday afternoon.

After breaking support at the $42.50 level in late November, General Mills (GIS) has been in a steady decline falling through $37 on Monday. Investors will be laser focused on margins when the company reports earnings on Wednesday. Rising input costs have made profitability challenging for the entire branded consumer food sector. Also reporting Wednesday is Paychex (PAYX). The recent announcement that the company will be acquiring Oasis Outsourcing Acquisition Corp. will drive a portion of the earnings call. Paychex paid $1.2 billion cash for the company and cited potential synergies in both revenue and cost savings. Analysts will be looking for management to flesh out the expected benefits from the merger.

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